On the National Front: Playing Nice Won’t Work

On the national front we’re encouraged about some of the business enhancing ideas coming from the White House. However, the state of discourse in Congress right now is not so encouraging. The so-called attempt of the Democrats and/or Republicans to put aside their divisive politics and work together to get something done is a joke. They are not going to work together. The only thing that most politicians want to happen is to get re-elected and as that is their primary goal, they will continue to be at a standstill.

That said, since the Democrats are in power, they just need to step up to the plate, march over those who get in the way and do something. Whoever the congressional person was that put the Nebraska Medicaid exemption in the healthcare bill should be boldly called out and pointed to as part of the problem. Keeping quiet and playing nice isn’t working. Any other elected official who is a stumbling block to progress should be called on the carpet for it.

At the same time the Democrats should be held accountable for any spending they approve. President Obama’s proposed budget, which you can view at budget.gov, suggests that it’s time to hold Washington to the same standards families and businesses hold themselves. Obama said: “It’s time to save what we can, spend what we must and live within our means once again.

“We simply cannot continue to spend as if deficits don’t have consequences; as if waste doesn’t matter; as if the hard-earned tax dollars of the American people can be treated like Monopoly money; as if we can ignore this challenge for another generation. We can’t.”

If this concept has any hope at all of being successful, according to the president, the same old grandstanding when the cameras are on, and the same irresponsible budget policies when the cameras are off has to stop.

Getting past the rhetoric helping small businesses in this country should be a primary goal of Washington as they enact legislation that can make a difference.

The administration’s budget proposal includes new tax cuts for people who invest in small businesses, tax credits for small businesses that hire new workers, investments that will create jobs repairing roads and bridges and tax breaks for retrofitting homes to save energy.

If these programs were to actually pass how would they be paid for without increasing the deficit? Obama has proposed a freeze in government spending for three years. This won’t apply to the benefits such as Social Security, Medicaid or Medicare. And it won’t apply to national security –- including benefits for veterans. But it will apply to all other discretionary government programs. Obama said: “We have gone through every department’s spending line by line, item by item, looking for inefficiency, duplication and programs that have outlived their usefulness. That’s how we freeze discretionary spending. Last year, we found $17 billion in cuts. This year, we’ve already found $20 billion.

“Now, some of these cuts are just common sense. For example, we cut $115 million from a program that pays states to clean up mines that have already been cleaned up. We’re also cutting a Forest Service economic development program that strayed so far from any mission that it funded a music festival. And we’re saving $20 million by stopping the refurbishment of a Department of Energy science center that the Department of Energy does not want to refurbish.”

The administration should also consider a small business across the board payroll tax holiday on all employees. Not only would this improve cash-flow, it would ease payroll costs for those businesses in the tough situation of considering lay-offs.

The proposed one-year elimination of the tax on capital gains, up from the current—but temporary—75 percent exclusion would provide added incentive to invest in small businesses, however it only applies to a handful of small businesses.

Something must be done about the looming estate tax. Unfortunately, the President was silent on enacting reasonable estate tax reform. NSBA could support an estate tax exemption of at least $3.5 million per person (indexed for inflation) with a reduced top rate of 45 percent. Due to the House and Senate’s failure to address this prior to the start of 2010, Congress is now considering a retroactive tax change which would be a huge problem for many small businesses.

Small business access to capital is at a crisis. According to a recent study, 78 percent of small businesses report that their company has been impacted by the credit crunch and more than one-third of small businesses (39 percent)—which amounts to more than 10 million—are not able to get adequate financing for their business.

President Obama’s proposal to divert $30 billion to community banks for such a lending program is a good start, but it must start now. And the administration must assure that the money is actually available to small businesses without the typical bureaucratic red tape that comes with government programs.

The NSBA has been calling for an extension of the SBA lending provisions enacted in the American Recovery and Reinvestment Act, specifically the increased guarantee on 7(a) loans and the elimination of up-front borrower fees. NSBA also has advocated for an increase in the loan caps for SBA lending programs.

Again these ideas are well and good, but the programs continue to get mired in red tape and have not been reaching the very businesses they are intended for.

The road to long-term economic recovery requires drastic measures. We call on our legislators to rise to the occasion. pha

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CASCADE BUSINESS NEWS

Cascade Business News (CBN), Central Oregon's business newspaper, is local and family-owned and operated by Jeff Martin. CBN is published the first and third Wednesdays of each month. CBN is a division of Cascade Publications Inc.